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Tax Byte

with Jessica L. Jeane, J.D.

IRS Issues Final Regs on Centralized Partnership Audit Regime

Jessica L. Jeane, J.D.

Jessica L. Jeane, J.D.

VP, Tax Policy & Strategic Partnerships

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The IRS hath gifted you this December 8 final rules governing the centralized partnership audit regime.

Gifted might be a strong stance; let’s just say provided. Either way, Happy Holidays.

Centralized Partnership Audit Regime

Today, the IRS issued final regulations (T.D. 9969), which exclude certain partnership-related items from the centralized partnership audit regime while providing alternative rules that will apply to the examinations of such items. The final regs, effective December 9, 2022, adopt, with revisions, proposed regulations (REG-123652-18) published in November 2020.

BBA

As you likely recall, the centralized partnership audit regime was created under the Bipartisan Budget Act (BBA) of 2015 (P.L. 114-74). The BBA significantly overhauled auditing and tax collection procedures for large partnerships.

Interestingly, a report released earlier this year by the Treasury Inspector General for Tax Administration (TIGTA) revealed that over three quarters of the audits conducted by the IRS under its centralized partnership audit regime resulted in no change in tax liability. The IRS closed 376 (roughly 78 percent) of these partnership returns as a “no-change,” according to the report.

Highlights

A snapshot of key issues addressed in the final regs include:

  • Applicability date;
  • Adjustments to non-income items;
  • When partnerships cease to exist prior to adjustments; and
  • Special enforcement provisions.

The IRS’s BBA Centralized Partnership Audit Regime webpage containing helpful information and other applicable regulations can be located HERE.

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